As the parent of a special needs child, you may be more familiar with certain types of government programs and forms of assistance than other parents. You may, too, understand that your special needs child must undergo means testing before receiving certain types of benefits commonly utilized by individuals with disabilities, including Supplemental Security Income. Because of this, you need to be extra careful when leaving assets behind for your child, because some methods of doing so have the potential to jeopardize his or her ability to receive government assistance.
According to CNBC, caring for a special needs child over the course of his or her lifetime may cost millions of dollars, and many parents of children with disabilities choose to establish special needs trusts on their behalf. The special needs trust accomplishes two key objectives. First, it gives you a tool through which to leave assets safely behind for your child. Second, it allows you to provide for your child without impacting his or her continued use of certain government assistance programs.
When you place assets such as life insurance policies into a special needs trust, they do not affect means testing in the same manner they would if you left them in a traditional will. Why? When you enter assets into a special needs trust, they are not considered the direct property of your special needs child, so there is no potential for those assets to make your child ineligible for government benefits.
If you left substantial assets to your child in a standard will, however, they may make it so he or she has too much available to him or her to maintain continued eligibility for necessary programs. Find more about estate planning on our webpage.